Trading its V-8 for a supercharged 333-bhp V-6, the S4 has more torque but less presence.

Mallorca, Spain — The world economy is not the only thing on a downward trend. So too, it would seem, is the size of the engines available in more upscale and/or higher performance models of cars: The next-generation BMW M5 will sport a twin-turbocharged V-8 instead of a V-10; word is that the next Chevrolet Corvette will be a smaller, lighter car with a smaller-displacement V-8, but likely to have an improved power-to-weight ratio. At this point, I fully expect the next Porsche Boxster/Cayman to be powered by a hi-po version of Volkswagen's 2.0-liter turbocharged, direct-injected 4-cylinder engine; the flat-6 would belong to the S models.

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Due to regulations to improve fuel economy — not to mention the inevitability of higher gas prices in the future — the robust 4.2-liter 340-bhp V-8 engine found in the last Audi S4 model is gone, replaced by a new, supercharged 3.0-liter V-6. While the horsepower figures are down slightly (333 bhp versus the former S4's 340), torque figures have improved and are available across a wider rev range — the boosted 6-cylinder offers up 324 lb.-ft. of torque from 2900 to 5300 rpm against 302 lb.-ft. at 3500 rpm. This new unit feels peppy, but just not outright powerful like the last-generation car's larger-displacement V-8. What cannot be denied is the new engine's huge jump in fuel efficiency: Audi says the 2010 S4 should achieve around 24 mpg on the highway compared to the old car's 20 mpg.

The S4 sedan and Avant wagon models also receive a handling upgrade via a firmer sport suspension, larger brake calipers and discs, and 18-in. tires and wheels (a 19-in. package is an option).

In addition to the numerous miles (kilometers) we put on both the S4 and S4 Avant models — with 6-speed manual and 7-speed S tronic twin-clutch transmissions, respectively — running around the island, each journalist had an opportunity to drive four laps around the Mallorca Circuit, a small road course. By the time my turn came around it was raining hard — an ideal scenario for testing out the latest version of Audi's Quattro all-wheel-drive system.

On the wet track, with the S4's stability control still engaged, the car weaved its way around the tight, slippery turns with aplomb. This Quattro system, in addition to splitting torque 40 percent forward and 60 percent to the rear wheels in normal (dry) conditions, features an option the company calls the "sport differential." It can route power laterally between the left and right rear wheels; on the wet track, even with stability control on, the driver can have some fun dishing an additional amount of right foot to kick the tail out a bit. And, as far as electrically based power steering systems go, the S4's is one of the most natural-feeling and communicative systems I've yet to experience. An adaptive, electronically adjustable suspension (with Normal and Sport settings) is also included with the sport differential upgrade.

The cabin is typical Audi — exemplary in design, materials and execution. This German manufacturer may arguably be constructing the finest interiors of any volume automobile manufacturer in the industry today. Any faux pas? Rear seat leg room, like many others in this midsize luxury sports sedan class, is a little tight. Subtle front grille and rear decklid S4 badging and an embossed S4 logo on the front buckets are essentially the only visual tell-tales that this is not your ordinary A4 sedan or wagon.